Question 1

IFRS 5 stipulates that losses on discontinued business should be disclosed as a single amount;&#10;A)in the notes to the income statement.&#10;B)on the face of the income statement.&#10;C)as a line in the capital reserves.&#10;D)as a line in the revenue reserves.

Accepted Answer

IFRS 5 requires that losses on discontinued operations should be disclosed as a single amount on the face of the income statement, separate from continuing operations. This is to provide users with relevant information to assess the financial performance of the entity and the effects of discontinued operations on the entity's financial statements. The other options (A, C, D) are not appropriate as they do not fulfill the disclosure requirements under IFRS 5.

Question 2

IAS 36 can be applicable to current assets in some circumstances.

Accepted Answer

IAS 36 Impairment of Assets applies to both tangible and intangible assets, including current assets, when there is an indication of impairment. However, the indicators and impairment testing process may differ for current assets compared to non-current assets.

Question 3

IAS 36 requires assets within its scope to be recorded at the lower of cost and market or fair value.

Accepted Answer

IAS 36 requires assets to be carried at no more than their recoverable amount, where the recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use, not the lower of cost and market or fair value.

Question 4

If a newly acquired asset is classified as held for sale it should be valued at;&#10;A)the lower of fair value and cost.&#10;B)the lower of cost and fair value .&#10;C)the lower of replacement cost and fair value.&#10;D)the lower of fair value and replacement cost.

Accepted Answer

According to International Financial Reporting Standards (IFRS), when an asset meets the criteria to be classified as held for sale, it should be measured at the lower of its carrying amount and fair value less costs to sell. Therefore, the correct option is to value the asset at the lower of cost and fair value. Option B reflects this requirement, whereas the other options suggest alternative valuation methods.

Question 5

An entity must test an intangible asset with an indefinite useful life not yet available for use for impairment annually.

Accepted Answer

According to IAS 36 - Impairment of Assets, an entity must test intangible assets with an indefinite useful life not yet available for use for impairment annually, or more frequently if there is any indication that the asset may be impaired.

Question 6

An asset which is to be abandoned cannot be classified as 'held for sale'.

Accepted Answer

An asset can only be classified as "held for sale" if it meets certain criteria, including that it is available for immediate sale in its present condition, and management has committed to a plan to sell the asset. If an asset is to be abandoned, it is not available for sale and therefore cannot be classified as "held for sale."

Question 7

Both depreciation and impairment can be considered to be a downward slope.

Accepted Answer

The answer of Both depreciation and impairment can be considered...

Question 8

To which of the following assets does IAS 36 apply?&#10;A)deferred tax assets&#10;B)deferred acquisition costs&#10;C)non-current assets classified as held for sale&#10;D)investments in subsidiaries

Accepted Answer

The answer of To which of the following assets does...

Question 9

When a non-current asset is classified as held for sale the appropriate depreciation policy is;&#10;A)straight line.&#10;B)no depreciation.&#10;C)declining balance.&#10;D)usage based.

Accepted Answer

When a non-current asset is classified as held for sale, it is no longer being used in the company's operations and is expected to be sold in the near future, therefore it is no longer considered in use and is not depreciated.

Question 10

A cash generating unit has the following values; Goodwill = €30,Property =€60 & Plant = €90.An impairment loss of €45 is suffered.After allocation of the impairment loss what is the carrying value of the property?

A)€54
B)€45
C)€30
D)€15

Accepted Answer

The impairment loss is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit. The remaining impairment loss is then allocated on a pro-rata basis to the other assets of the unit. Here, the goodwill of €30 is first reduced to zero by the impairment loss, leaving €15 (€45 - €30) to be allocated to the Property and Plant. The total before impairment for Property and Plant is €150 (€60 + €90). The Property's share of the remaining impairment is (€60/€150) * €15 = €6. Therefore, the carrying value of the Property after impairment is €60 - €6 = €54.

Deck 15: Impairment and Disposal of Assets